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Fletcher: What might happen in 2012

January 3, 2012
Stephen Fletcher , The Alpena News

This is the time of year when folks prognosticate the future. I wouldn't say I am very lucky at gambling but I am willing to make certain bets on future events.

First, the president's State of the Union speech will propose more income redistribution like the $500 he gave folks three years ago and the moratorium on paying into the decaying Social Security system for the individual's side. These items aren't "stimulus" items but rather are redistribution of income items. It's important that he does this as he can then align himself with the "occupy" movement and continue with the class warfare rhetoric.

The second thing in January I believe will happen is the vote on the debt ceiling increase. This is a perfect time for the Republican controlled House to vote "no" because the way the legislation was written last summer is that even if the Congress votes "no," then the president can veto its vote and increase the debt ceiling anyway. The politics of fighting for holding the line against spend-thrift government will be too good to pass up with a campaign just around the corner.

In February, the Middle East will blow up because of the existing unrest being exacerbated by food shortages due to the failure of the hard wheat crop in Russia and Georgia. With the turmoil in the various Arab countries, I'm speculating that it's pretty hard to save up for a "rainy day" when the bullets are flying. The price of wheat has abated somewhat but I think for the average Joe in those countries, his income is down this year because of the political unrest manifested in his homeland.

In March, we get to see the "world's greatest deliberative body," our Congress, once again take up budget balancing. What's different? Once again it will practice brinksmanship and at the last minute a kind of nothing compromise will be struck. Isn't it great that we will be able to see this level of statesmanship at work? All this makes you wish for an earlier election so that we could throw them all out to enable a fresh start.

Well, what about the election? I'm saying that by April, Mitt Romney will be the challenger. Also, by April, something should have broken loose in Europe.

All of the behind the scenes whispering and cajoling among the European nations should be about over and the result will put enormous pressure on keeping the euro from fragmenting. Almost for sure, some countries will drop the euro as their currency and will regress to their own monetary system. The good news is the euro should continue to drop vis-a-vis the dollar and this summer should be a relatively cheap time for U.S. citizens to visit Europe.

During the summer we will see even more moves from the White House at income redistribution that will be called "stimulus." It won't be stimulus as this redistribution won't stimulate those who create jobs.

Into the fall, things will get crazier and there will be political charges that the banking system was entirely at fault for the recession because the only other suspects all will be running for office.

There won't be a great deal of change in the economy before the election because all of the same players will be holding tight to their established positions.

If you keep doing the same things over and over again expecting different results, it's a form of insanity.

There is really no way to know what the year holds after the election as this horse race looks close at this time.

Stephen Fletcher was graduated decades ago from Cornell University with an A.B. in Economics and from Michigan State University with an M.B.A. He has lived and worked in the decades from graduation until now in the Alpena area. He thinks economics is fun and interesting.

 
 

 

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